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Finance Minister Arun Jaitley today ruled out resorting to retrospective tax legislation, an issue that deterred investors after changes by the previous UPA government.
"Will this government rely on retrospective tax legislation. My answer is no.
"Ordinarily, we will not legislate to create fresh liabilities which actually means that some old taxes are being collected for last forty years. And (if) some technical problem arises you can correct that. But will you create new liabilities with effect from back date, the answer is ordinarily no," he told PTI in his post budget interview.
He was responding to a question on the tax issue concerning British telecom giant Vodafone which is facing a tax liability of about Rs 20,000 crore because of retrospective tax amendment carried out by the previous UPA government.
In his budget speech, Jaitley had said that this Government will not ordinarily bring about any change retrospectively which creates a fresh liability.
Answering questions on the issue, he said, it is very clear that with regard to retrospective taxation there are four crystal clear issues which come out.
"Does Indian parliament have a jurisdiction to legislate retrospectively. The answer is Yes it has. I can't curtail this jurisdiction and I won't do that".
Secondly, will the government undertake retrospective tax legislations. The answer is no, he said.
"Three, if the 2012 amendment remains or are fresh notices going to be issued under those amendments. The answer is the assessing officer will not issue those notices," he said.
Jaitley said tax officials would report such cases to the Central Board of Direct Taxes (CBDT) which will have a permanent committee so that these issues are clearly resolved.
About the past cases, he said, they are pending in courts or other tribunals and the government awaits judgement. "The legal process can resolve those cases," he added.
Meanwhile, Vodafone has said that it will continue the international arbitration process in the tax dispute with the government.
"We note the FM's announcement that existing cases arising from the 2012 retrospective tax law should follow the lawful process in which they are currently being adjudicated," Vodafone said in a statement.
Vodafone will therefore continue process of international arbitration initiated under the India-Netherlands Bilateral Investment Treaty, it added.
Answering question on his budget proposals Jaitley said he had tried to give more money to the marginal taxpayer by hiking tax exemption limit to Rs 2.5 lakh